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2015 (10) TMI 1390 - AT - Income TaxBad debts claim - CIT(A) allowed the claim - Held that - We find that the issue of allowability of bad debts is covered in favour of the assessee with the decision in TRF Ltd. Vs. CIT (2010 (2) TMI 211 - SUPREME COURT) and Girish Bhagwatprasad 1999 (9) TMI 5 - GUJARAT High Court . We find that the CIT(A) has rightly followed the decision of the Hon ble Gujarat High Court in Girish Bhagwatprasad (supra) wherein held that once it is established that the assessee has written off the business debt, it is not necessary to establish that the said debt had become bad. The fact that the assessee has written off the amount of debt in its account books, has not been doubted by the Revenue. In these facts, following the decisions of the Hon ble Apex Court and Hon ble jurisdictional High Court, we decide the issue in favour of the assessee
Issues: Allowability of bad debts
Issue Analysis: The appeal by the Revenue for the Asstt. year 2002-2003 is against the order of the CIT(A) directing to allow the claim of bad debts of Rs. 20,48,399. In the first round of litigation, the Tribunal dismissed the appeal of the Revenue due to the disputed tax effect being below Rs. 2 lakhs. The Hon'ble jurisdictional High Court set aside the Tribunal's order and remanded the appeal to be decided on merits. The learned counsel for the assessee argued that the issue of bad debts' allowability is covered by the binding decision of the Hon'ble Apex Court and the Hon'ble Gujarat High Court. The Revenue contended that the assessee failed to prove the debt had become bad. The Tribunal found that the CIT(A) rightly followed the decision of the Hon'ble Gujarat High Court, stating that once the assessee wrote off the business debt, it is not necessary to establish it as bad. As the Revenue did not doubt the write-off in the account books, the Tribunal decided in favor of the assessee, confirming the CIT(A) order and dismissing the Revenue's appeal. Conclusion: The Tribunal confirmed the order of the CIT(A) allowing the claim of bad debts and dismissed the appeal of the Revenue for the Asstt. year 2002-2003.
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